Paul L. Caron

Wednesday, April 29, 2009

IRS Releases Strategic Plan 2009-2013

IRS Strategic Plan The IRS yesterday released its Strategic Plan 2009-2013:

The Internal Revenue Service strives to maintain the fairest and most effective system of voluntary tax compliance in the world. The environment in which we operate is complex and constantly changing, and the IRS must change with it. ...

[S]tudies of international tax systems show that the U.S. tax system is extremely effective, and the IRS has a highly motivated workforce that clearly understands its mission. The IRS must continue to deliver this high level of performance both in how we serve taxpayers and in how we enforce the tax laws. The Strategic Plan 2009-2013 will guide the IRS in this work by emphasizing two overarching goals.

Our first goal is to improve service to taxpayers to make voluntary compliance easier. We will work harder to incorporate taxpayer perspectives, expedite resolution of taxpayer issues, and provide timely guidance to help all taxpayers pay their fair share of taxes. We will also strengthen our partnerships with tax practitioners, preparers, and other third parties in the system.

Our second and equally important goal is to enforce the law to ensure everyone meets their obligation to pay taxes. We will be timely in our enforcement actions and expand the approaches and tools we use in compliance activities. We will meet the challenges of globalization by improving our expertise and coordinating better with international organizations.

We need to excel at both service and enforcement to meet our mission: it isn’t an either/or proposition. To succeed, we will support these goals by investing in two strategic foundations – our people and our technology. We will strive to make the IRS the best place to work in government. We will give our people the technology they need to improve efficiency, ensure privacy and security of data, and target the highest-risk areas of tax abuse and fraud.

Major trends affecting the IRS: 2009-2013

  • Increasing complexity of tax administration
  • Growing human capital challenges
  • Explosion in electronic data, online interactions, and related security risks
  • Accelerating globalization
  • Expanding role of tax practitioners and other third parties in the tax system
  • Accelerating change in business models

Goal 1:  Improve service to make voluntary compliance easier

  • Objective 1: Incorporate taxpayer perspectives to improve all service interactions
  • Objective 2: Expedite and improve issue resolution across all interactions with taxpayers, making it easier to navigate the IRS
  • Objective 3: Provide taxpayers with targeted, timely guidance and outreach
  • Objective 4: Strengthen partnerships with tax practitioners, tax preparers, and other third parties in order to ensure effective tax administration

Goal 2:  Enforce the law to ensure everyone meets their obligations to pay taxes

  • Objective 1: Proactively enforce the law in a timely manner while respecting taxpayer rights and minimizing taxpayer burden
  • Objective 2: Expand enforcement approaches and tools
  • Objective 3: Meet the challenges of international tax administration
  • Objective 4: Allocate compliance resources using a data-driven approach to target existing and emerging high-risk areas
  • Objective 5: Continue focused oversight of the tax-exempt sector
  • Objective 6: Ensure that all tax practitioners, tax preparers, and other third parties in the tax system adhere to professional standards and follow the law

Strategic Foundations: Invest for high performance:

  • Objective 1: Make the IRS the best place to work in government
  • Objective 2: Build and deploy advanced information technology systems, processes, and tools to improve IRS efficiency and productivity
  • Objective 3: Use data and research across the organization to make informed decisions and allocate resources
  • Objective 4: Ensure the privacy and security of data and safety and security of employees

(Hat Tip: Tax Resolution University.)

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90,000+ employees and an $11 billion dollar budget can't be wrong.

I propose we save the taxpayers $11 billion per year, abolish the current tax code and use the following tax code:

___________(income) x 12.5% = taxes owed

Revenues would go up.

Posted by: Easycure | Apr 29, 2009 7:09:36 AM

"voluntary tax compliance"???

Voluntary??? I don't think that word means what the IRS thinks it means.

"to make voluntary compliance easier."

Hmmmm ok how about a flat tax of 15% (or even 25% with the democrats in power, after all they have never met a tax they didn't like) with one general deduction for yourself and each dependent. (Nuke the student loan interest deduction, one I get. Nuke the mortgage deduction, one I would be getting. Nuke the charity deduction, one I can also claim. Nuke it all.) That's it, five lines perhaps? The tax code which can be contained in one page. *THAT* would make "voluntary" compliance easier.

Posted by: Cannon Asesrb | Apr 29, 2009 7:13:20 AM

Taxes are voluntary?

Posted by: CDR M | Apr 29, 2009 7:34:39 AM

"The Internal Revenue Service strives to maintain the fairest and most effective system of voluntary tax compliance in the world."

"Our second and equally important goal is to enforce the law to ensure everyone meets their obligation to pay taxes."

I've always been both amused and angered by our obligation to voluntarily pay our taxes.

Posted by: Dave in Ohio | Apr 29, 2009 8:24:30 AM

"The Internal Revenue Service strives to maintain the fairest and most effective system of voluntary tax compliance in the world. The environment in which we operate is complex and constantly changing, and the IRS must change with it. ..."

Oh, please! In IRS's world, sections 111(a) and 56(b)(1)(D) respectively provide for "DOUBLE OR NOTHING TAXATION" of the income/refund related to a state income tax overpayment. In the real world, those sections provide for a "zero sum game" in terms of taxable income.

Tax year 2008 marked the twenty-fifth anniversary of IRS's scheme to swindle Social Security beneficiaries with instructions that include state income tax refunds and other itemized deduction recoveries in the determination of the taxable portion of Social Security benefits. As a consequence of that instruction the gross income attributable to the refund/recovery can exceed the amount of the refund/recovery by up to 85 percent. It doesn't stop there. The refund/recovery and any additional taxable Social Security benefits attributable to the refund/recovery are also used in the AGI and modified AGI based phase-out calculations of a total of neary thirty credits, deductions, exemptions, exclusions, and eligibilities.

By contrast, if President Obama had paid the AMT in 2008, the $7991 state income tax refund reported on line 10 of Form 1040 would have been excluded from alterminimum minimum taxable income by the instruction on line 8 or Form 6251. Thus, the neither the $7991 used for the overpayment of taxes in 2007 nor the refund of the overpayment in 2008 would have been taxed directly.

I personally raised the issues described above with IRS in 1994. Do I really have to get into the responses that I have received from IRS during the intervening fifteen years?

Here are two questions related to the above that IRS refuses to answer.

Precisely, what is it about the language in section 111(a) of the Internal Revenue Code that allows IRS to issue instructions that can result in the gross income attributable to an itemized deduction recovery exceeding the amount of the recovery?

How would the instruction for line 8 on Form 6251 (2008) change if section 56(b)(1)(D) of the Internal Revenue Code was amended to read as follows?

(D) Treatment of certain recoveries
No recovery of any tax to which paragraphs (1), (2), or (3) of section 164(a) applied shall be included in gross income for purposes of determining alternative minimum taxable income.
Subparagraph (D) shall not apply to the recovery of a tax allowable in computing adjusted gross income.

Posted by: WD Kebschull | Apr 29, 2009 8:45:57 AM

While the IRS reports that nearly 84 percent of all taxes are paid on time by taxpayers reporting freely and voluntarily, this means that 16% of of the taxpaying public have tax problems. And in this recession, we can expect that percentage to increase significantly. Bottom line: The IRS will be increasing the enforcement of tax law to ensure that all Americans pay their full tax liability. If you can’t afford to pay your taxes or have unfiled tax returns, it’s more important than ever to know your options for tax relief and avoid the wrath of the IRS.

Posted by: Michael Rozbruch, IRS Problem Solver | Apr 29, 2009 8:56:08 AM

It always give me a good chuckle to read these words, "voluntary tax compliance."

With respect to Goal 2, how does one "enforce" an "obligation" which is "voluntary?"

Posted by: Chris | Apr 29, 2009 8:59:20 AM

"strives to maintain the fairest and most effective system of voluntary tax compliance in the world."

Why does the IRS have this fetish for calling our tax compliance "voluntary" when it is no such thing? Do I not have to pay my taxes after all? Something's not voluntary when if you choose not to do it, you are a criminal guilty of a crime for which you can be thrown in jail. That would not be "voluntary".

Do these idiots know their perpetual false use of the word "voluntary" just fuels those annoying redneck tax-protester cranks who keep buying gold coins and declaring themselves sovereign countries?

Posted by: Kevin | Apr 29, 2009 11:20:03 AM

Someone said, during the 40s (referring to the Soviet Union's 5-year plans) that you don't get to a millennium by stringing a bunch of 5-year plans together.

"Objective 1: Make the IRS the best place to work in government."

As the say, they've got a hard row to hoe.

And for some odd reason, there's no reference in the Objectives to Trend #1: "Increasing complexity of tax administration".

And no reference in the Trends to the complexity of tax law.

Posted by: ZZMike | Apr 29, 2009 12:03:42 PM

This must have been issued on April 1st, right?

Posted by: Ralph Short | Apr 29, 2009 3:56:25 PM